Abstract

In China, elevated levels of urban air pollution result in substantial adverse health impacts for its large and rapidly growing urban population. An expanded version of the Emissions Prediction and Policy Analysis (EPPA), EPPA Health Effects, was used to evaluate air pollution-related health impacts on the Chinese economy. The effects of particulate matter and ozone were evaluated for 1975 to 2005, based on a set of epidemiological estimates of the effects of exposure to these pollutants. The estimated marginal welfare impact to the Chinese economy of air pollution levels above background levels increased from $22 billion in 1975 to $112 billion in 2005 (1997 US$), despite improvements in overall air quality. This increase is a result of the growing urban population and rising wages that thus increased the value of lost labor and leisure. Welfare losses from air pollution-related economic damage decreased from 14% of the historical welfare level in 1975 to 5% in 2005 because the total size of the economy grew much more rapidly than the absolute air pollution damages.